Risky Shift Phenomena and Its Influence on Consumer Behavior

Topics: Polarization, Risk, Group polarization Pages: 5 (1810 words) Published: April 21, 2012
Unfortunately, a lot of the psychological literature on this particular topic was written in the 1960’s/1970’s when the term Risky Shift was most popular. With more current research, the term Risky Shift has been replaced with the term Group Polarisation. (Deegs 2009:1) The term Risky Shift was first coined in in the early 1960’s and was used to describe the tendency for groups to take more risks than the same individuals within these groups would have taken had they been faced with the same problem alone. There were inconsistencies with early studies however, which lead some researchers to introduce the term ‘stingy shift’ which was basically the same as a risky shift in that the group would tend to agree on the decision, however in this case, the decision was to be more conservative, or stingy. This idea seems to correlate quite well with the basic principles of groupthink, which is "a mode of thinking that people engage in when they are deeply involved in a cohesive group, when the members' strivings for unanimity override their motivation to realistically appraise alternative courses of action“ (Baumeister & Bushman, 2008) Group Polarization can occur anywhere, anytime and anyone can do it. Occasions in the army where Group Polarization occurs is called incestuous amplification, whereby an individual will only listen to people with like beliefs, which in turn can lead to miscalculations and errors in judgement. (Wordspy 2011) Organisations can use or abuse the risky shift phenomena to increase sales and brand awareness, it is therefore a very powerful and strategic tool to be used in obtaining certain desired states or organisations’ goals and objectives. The risky shift phenomena (and the behaviour of consumers that goes with it) can effectively be used by organisations to create competition from economies of scale to monopoly. It therefore adds value as a valuable tool to obtain competitive sustainable advantage.

2.RISKY SHIFT PHENOMENA AND ITS INFLUENCE ON CONSUMER BEHAVIOUR The Risk-shift phenomenon states that contrary to popular belief, when in the safety of a group, people are more likely to make riskier decisions. This occurs because when one is acting alone, there is rarely more than that one person alone to blame. When entrenched in a group, at least there are other people to share the blame. In addition, as the overall success of the group goes up, so does the riskiness taken in their decisions. (Comm1701. 2010:11) When people are in groups, they make decision about risk differently from when they are alone. In the group, they are likely to make riskier decisions, as the shared risk makes the individual risk less. They also may not want to let their compatriots down, and hence be risk-averse (this is sometimes called cautious shift). The overall tendency towards a shift in risk perception is also sometimes called choice shift. There are a number of reasons as to why this might happen. Theories have included: •Wallach, Kogan, and Bem (1964) proposed that greater risks are chosen due to a diffusion of responsibility, where emotional bonds decrease anxieties and risk is perceived as shared. •Collins and Guetzkow (1964) suggested that high risk-takers are more confident and hence may persuade others to take greater risks. •Brown (1965) indicates that social status in groups is often associated with risk-taking, leading people to avoid a low risk position. •Bateson (1966) suggests that as people pay attention to a possible action, they become more familiar and comfortable with it and hence perceive less risk. Myers and Bishop (1970) put highly prejudiced students together to discuss racial issues. They became even more prejudiced. The reverse happened with unprejudiced students, who became even more unprejudiced. (Comm1701. 2010:11) There are varying explanations that attempt to provide a reason as to why group polarization occurs. For instance, a diffusion of...

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